Hungary offers to buy steel maker Dunaferr to save jobs

BUDAPEST

BUDAPEST Hungary's government will offer to buy back the loss-making steel maker Dunaferr from Ukraine's ISD group, to prevent a layoff of 1,500 workers planned by the company, Economy Minister Mihaly Varga said on Monday.

"If the firm says that it makes a loss ... I think it is a fair offer from the government to say that we should sit down and talk about how we could reverse the bad privatization (which happened) in 2004," he told HirTv after a government meeting.

A takeover would guarantee the jobs of 7,500 workers employed by Dunaferr in Dunaujvaros, a town 60 kilometers south of Budapest, in the long term, Varga said.

Dunaferr's layoffs come in a politically sensitive time for Prime Minister Viktor Orban's conservative nationalist government which prepares for elections in April or May next year, while unemployment is high and the economy hardly grows.

The ruling party Fidesz has kept a lead in opinion polls with the help of popular measures including big taxes on mostly foreign-owned sectors including banks, state-imposed energy price cuts and a drive to cut foreign influence on the economy.

In a symbolic act earlier this month, the government paid back its remaining debt to the International Monetary Fund ahead of expiry next year.

Earlier this year it purchased the gas business of Germany's E.ON (EONGn.DE) as part of its drive to buy back firms and stakes sold by earlier Socialists governments, and parliament also passed a bill to boost government influence on savings cooperatives.

Varga said he would send a letter to the company's owners in the next days, offering to launch talks about a takeover deal. He declined to estimate the price.

The national news agency MTI quoted a Dunaferr official as saying that the company, which turned to losses after the 2008 global crisis, posted a loss of almost 50 billion forints ($222.25 million) in the past two years. The official did not disclose how much debt Dunaferr had. ($1 = 224.9766 Hungarian forints)